Yesterday, Samak reversed his statement, saying the Thai banking system is still in good shape. But the reversal came too late and it marks another unfortunate incident in which Samak has unnecessarily harmed the market.
No one was surprised by Samak's unwise remark. But Samak should have known that this time he's no longer just a grumpy old man; he is now the prime minister and his comments are taken seriously by the market.
Besides, Samak made the comment during a prime time programme on Tuesday on state-run television. The remark wasn't an impromptu response to a press ambush. In the live programme televised nationwide, he said that some commercial banks were in danger of collapsing despite the Bank of Thailand's Financial Institutions Development Fund's (FIDF) effort to inject more than Bt8 billion to re-capitalise funds to these banks.
Samak didn't name names. However, his comment directly hits BankThai and Siam City Bank, both small-sized financial institutions, which have been working on re-capitalisation plans under the central bank's assistance programme for some time.
By making such an irresponsible statement, Samak unnecessary brought instability to the capital and financial market. Over the past two days, clients of these two banks were in a panic and some even withdrew their money, fearing the collapse of the banks.
Samak demonstrated a failure to understand the nature of the financial market, which can be highly sensitive to any news and rumours. No one criticised him for not being an expert on the financial market. However, as prime minister, Samak should have shown his leadership skills by protecting the stability of Thailand's currency system instead of rocking his own boat.
On Tuesday, Samak claimed he needed to expose the banking system because certain banks would be sold to foreigners under his premiership. Samak was concerned that once the FIDF under the central bank announced its intention to sell these two banks to foreigners, he would be made a scapegoat.
He said, "I have to say this to protect myself. Once they sell the banks, I will become the scapegoat, even though they have planned this all along," he said during the programme.
On Thursday, the Bank of Thailand's Governor Tarisa Watanagase rushed into damage-control mode by assuring the public that the Thai banking system was still stable.
Finance Minister Surapong Suebwonglee also insisted yesterday that the Thai banking system remains strong and no commercial bank is in distress.
However, it took Samak at least two days to correct his irresponsible remarks to implicitly admit that he was wrong. He said on Thursday that the banking system was stable. But why did it take him so long to admit this and why did he make such an irresponsible remark in the first place?